The economy in feudalism is essentially a traditional economy. Serfs and other peasants on feudal estates generally raised the sorts of crops they had always raised. They were ruled by people whose power over them came from tradition. They were not free to grow whatever they thought they could sell, nor were they free to try to sell their labor to another employer. For this sort of reason, the issues of what to make, how to make it, and who to make it for were answered by tradition.

In order to transform this into a market economy, one necessary step would be to free labor to move around. Serfs and peasants would need to be freed from the ties that held them to a certain piece of land. Once this was done, these workers would have the choice of where to work. They would presumably choose to work in ways that would give them the greatest ability to make money. This would have been a large step towards allowing the market to solve the economic problem.

The feudal economy resulted from the collapse of international trade at the end of the Roman Empire. Eventually domestic trade also became curtailed as the social and political collapse continued, and the whole economy eventually followed. This condition of feudal economic stasis endured for nearly 1000 years in Western Europe, and was only finally overthrown when trade became re-established. As trade increased, agricultural innovation and efficiencies followed, so not as much labor was needed maintaining the food supply. The excess farm labor turned to other skills that were starting to be in demand; the rise of the skilled craftsman coincided with the end of feudalism. Rather than being stratified into the noble, church, or peasant classes, trade and the benefits it brought enabled people to choose additional activities to produce goods and services that could be brought to an expanding market.